Wieser sees no need for extra cash, but Simitis urges caution

At Delphi on Friday, former premier Costas Simitis backed the Bank of Greece in its support for a precautionary line of credit after the end of Greece’s bailout program, but former Euro Working Group president Thomas Wieser said that was “rather unlikely.”

Wieser made the comment during a discussion with Kathimerini’s editor Alexis Papachelas on stage at the Delphi Economic Forum. He also expressed the view that a precautionary program should be seen as a safety net that would contribute toward the fulfillment of the measures agreed, rather than a new adjustment program.

He added that he does not believe the Greek state will face any liquidity problems, nor that Greek banks will require additional funds after the stress tests. He also rejected the idea that the eurozone is more lenient toward Alexis Tsipras’s government than previous administrations.

Returning to the turbulent past, Wieser expressed the view that “from January to July 2015 the Greek government was provoking Grexit.” He described his estimate that Greece’s loss during that period amounted to 200 billion euros as “safe, with some people even considering it as conservative.”

Speaking later in the day at the same forum, Simitis – Greece’s premier from 1996 to 2004 – said the government narrative about a “clean exit” from the bailout program is “a fairy tale,” as the country will continue to be under strict monitoring.

“The government says we will be able to borrow freely at any interest rate we wish, but the rate will not be the 1-2 percent we now borrow at from the European institutions,” Simitis, also a former finance minister, stated.

He reminded the audience that the recent seven-year bond issue had a starting rate of 3.75 percent which has now climbed to 4 percent. He then estimated it could gradually rise, as was the case in 2010-12, reaching up to 6 percent.

“Once we get there, an inevitable consequence will be the imposition of new terms on the government’s fiscal policy. It will be the opposite to what the government desires. This is why there should be certain precautionary measures in place. I find what Bank of Greece Governor Yannis Stournaras stressed, about a precautionary line of credit, to be just right,” Simitis said.

He added that the high primary surpluses for many years to come, as dictated by the bailout program, are not feasible.